Linda Hunt as photographer Billy Kwan in The Year of Living Dangerously. Photograph: YouTube

Australian cinema in 2014 delivered not one but two great performances from female actors playing women who become men.

In the Spierig brothers’ madcap time travel movie Predestination, Sarah Snook turned heads in a role that not only saw her play both genders but also offered a wild and saucy take on what might happen if a person bumped into a version of themselves from the future. Del Herbert-Jane struck a more melancholic note in director Sophie Hyde’s drama 52 Tuesdays, which focused on a daughter’s reaction to her mother’s journey to becoming a trans man.

But Peter Weir’s 1982 film The Year of Living Dangerously, adapted by the director himself and playwright David Williamson from Christopher Koch’s bestselling novel, takes the cake for the most startling gender-realigning performance in Australian cinema.

American actor Linda Hunt played Chinese-Australian dwarf Billy Kwan, a photographer who teams up with newbie foreign correspondent Guy Hamilton (Mel Gibson) when he moves to Jakarta. Billy shows him the ropes in a city where simmering danger (the film is set in the mid 1960s, during the overthrow of President Sukarno) is about to boil over into violence and revolution.

Hunt’s performance isn’t startling because of a body-related character arc. There is no physical transformation for Billy, who has always been a man. It’s startling because Hunt’s performance is so good you never pause to doubt it.

What a bold (yet strangely sensible) turn of casting: Hunt, a woman, hired to play Billy, a man, because she was simply the best fit for the part. Hunt stole the hearts and minds of audiences and wooed the Academy, who awarded her an Oscar for best supporting actress.

Billy is stubborn and headstrong but needy in uncomfortable ways that the film gradually reveals. He shares similarities with acidic protagonist Barbara Covette (Judi Dench) from director Richard Eyre’s Notes on a Scandal, a loquacious narrator loyal to the point of being unnervingly possessive. Hunt channels the demeanour of someone constantly trying to make sense of the environment around them, propelled to pick it apart bit by bit: a world of big things and grand purposes, overpowering and impenetrable.

There is a scene in which Billy looks up at a huge billboard-sized picture of Suharto and stands in awe, as if wowed by the might of it. Hunt’s performance seems to exist in that moment: a constant struggle to come to terms with forces outside the control of Billy, a proud, cunning little man forced into humility.

The Year of Living Dangerously charts his journey and those of several others with a sensibility both subtle (utterly restrained, given the subject and setting) and unforgettable (the film’s images, particularly Billy’s final scene and Guy’s trip to the airport in the last act, will stay with you).

It opens with Billy banging away on his typewriter, writing to Guy. Moments like this form a voiceover that give the film a colourful, literary ooze, as if partly written by Billy himself. The commentary functions like film noir narration (recalling the framing of 1944 classic Double Indemnity – the confession of a crooked insurance salesman to his boss), only more florid and a little less spiffy.

“Most of us become children again when we enter the slums of Asia,” Billy writes. “Last night I watched you walk back into childhood, with all its opposite intensities. Laughter and misery, the crazy and the grim. Toy town and a city of fear.”

As bold but strait-laced Hamilton – a fish out of water rising to a challenge and slowly growing frazzled and stressed – Mel Gibson cuts a solid presence in the Tom Cruise ilk of a leading man. The film’s emotions either bounce off or project on to him, without the actor needing to do much. Sigourney Weaver plays his lover, and while the film’s poster depicts their embrace, it’s most memorable for other things – its mood, its sense of location and Hunt’s tour de force performance.

The Year of Living Dangerously was the first Australian film to be financed by an American studio (MGM). While indisputably there is plenty Australian about it (including key characters and cast, the crew, filming locations, government-granted tax incentives and financing for development and marketing), the producers’ unprecedented wheeling and dealing with Hollywood ultimately led to an existential question for the local industry: what does the term “Australian film” even mean?

That question hit a high water mark (or a moment of absurdity) in January 2014 when a blockbuster studio movie, The Great Gatsby, won 13 Australian Academy of Cinema and Television Arts awards. It was not only financed by Warner Bros and led by A-list Hollywood celebrities, but based on a book widely regarded as one of the greatest and most quintessentially American novels.

The Year of Living Dangerously was a stepping stone to Hollywood for Weir, whose body of work includes Picnic at Hanging Rock and The Last Wave. It was on the set of his first world war film Gallipoli that he proposed the character of Guy Hamilton to Gibson. The director, one of our very greatest, has made fine work since (including 1989’s Dead Poet’s Society and 1998’s The Truman Show) but never returned to Australian stories.